Govt’s 5-Year Debt Management Plan to Reduce Pakistan’s GDP-to-Debt Ratio by 13%

Under the five-year debt management plan, the federal government will borrow around Rs.. 11 trillion to address the financial needs of the country.

Between the fiscal years 2019-20 to 2023-24, the government will borrow Rs.. 4.177 trillion from external sources while Rs. 6.898 trillion will be sourced from domestic sources.

The borrowing will increase the domestic debt ratio to 70%. However, the ratio of foreign debt will come down to 30%.

In the fiscal year 2019-2020, the government will borrow Rs. 3,173 billion from both foreign and domestic sources. According to the Ministry of Finance, of the Rs. 3,172 billion, Rs. 1801 billion will be borrowed from domestic sources and Rs. 1372 billion in foreign loans.

The government intends to rely less on foreign loans from the financial year 2020-2021 onwards. Under the five-year debt management plan, the government will borrow a total of Rs. 2,613 billion in the fiscal year 2020-2021. Rs. 1010 billion will be taken under foreign debt while Rs. 1603 billion will be borrowed from domestic sources.

Furthermore, the government will borrow Rs. 2,071 billion in the fiscal year 2021-22. During the fiscal year 2022-2023, the government will take a loan of Rs. 1,612 billion from both foreign and domestic sources.

During the fiscal year 2023-2024, the government plans to take Rs. 1,606 billion of loans from both domestic and foreign lenders.

By the end of the five-year debt management plan, the total public debt of Pakistan will be Rs. 45.57 trillion. This will be an increase of 47%.

Under the Public Debt Management plan for fiscal years 2019-2020 to 2023-2024, the Ministry of Finance predicts an increase of 80% in foreign debt. After the financial year 2023-24, the total foreign debt will be Rs. 18.77 trillion. Moreover, the total domestic debt will grow to Rs. 26.8 trillion at the end of the fiscal year 2023-2024.

Recently, the International Monetary fund (IMF) released its Fiscal Monitor Report. According to the report, Pakistan’s debt to GDP ratio was 76.7% in the last fiscal year. The report has predicted an increase of 78.6% in debt to GDP ratio for the ongoing fiscal year. The report has also projected a decline in the debt to GDP ratio from the fiscal year 2021-2022 onward. However, by 2024, the debt to GDP ratio is expected to drop to 65%, 5% below the danger threshold of 70%.


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